Euro, dollar fly under the radar ahead of Fed minutes

Wednesday, 9 Jul 2014 | 8:43 AM ETReuters

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New Zealand one and two dollar coins on a background of bank notes.

The euro was steady against the dollar on Wednesday, with traders looking to a speech by European Central Bank chief Mario Draghi and minutes of the U.S. Federal Reserve's latest meeting for direction later in the day.

Markets are still waiting for more strongly hawkish signals from the Fed of higher interest rates next year that many expect will eventually drive U.S. bond yields higher and the dollar with them.

The euro drew some support from a relatively downbeat assessment of the pace of U.S. growth from two Federal Reserve officials overnight. But in a day bereft of top tier data there was little for traders to get their teeth into. Against a basket of major currencies, the greenback traded marginally higher at 80.21.

Against a basket of major currencies, the greenback traded marginally lower at 80.152 It was flat against the euro near $1.36.

Against the yen, the dollar has fallen all the way back to levels seen before a strong jobs report last Thursday, hurt by a retreat in U.S. Treasury yields from last week's highs. It held steady under 102 yen on Wednesday.

"I think the contents of the minutes might turn out to be dollar-positive," said Masafumi Yamamoto, market strategist for Praevidentia Strategy in Tokyo. "Whichever data you look at, the inflation rate (in the United States) has been rising and I'm not sure that can be dismissed as just noise."

The New Zealand dollar inched up to a three-year high of $0.8819, adding another quarter of a percent after a surge on Tuesday triggered by an improvement in the outlook on one of its sovereign credit ratings. The kiwi has gained around 9 percent since January on the back of a steady rise in domestic interest rates; it is the only developed-world economy in which borrowing costs are rising.